17. SEGMENT REPORTING

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the chief operating decision maker (“CODM”) for making decisions and assessing performance as a source of the Company’s reportable operating segments. During the year ended December 31, 2017, the Company acquired new businesses and, as a result, the CODM, who was the Interim Chief Executive Officer of the Company, began making decisions and assessing the performance of the Company using three operating segments comprised of these reporting units, whereas the Company was previously a single operating segment.

Technology – The Technology segment includes companies that count technology licensing as their principal business activity. Current patent portfolios held by this segment include patents relating to 3D television technologies, automotive headlight assemblies, phased loop semiconductor technology, microcontrollers applicable to safety-critical aerospace, semiconductor manufacturing and packaging technologies, medical, industrial and automotive applications, computer gaming, medical stent technologies, intelligent personal assistant technologies, CMOS image sensors, enhanced image processing, streaming video technologies, building automation, non-volatile Flash memory, other memory technologies, semiconductor clocking technologies, smart meter monitoring, LED lighting technologies and many other technologies.

Mobility – The Mobility segment includes companies providing systems and services focused on the interconnection of devices for mobile applications. The first investment in this segment is IRD, one of the world’s leading providers of integrated systems and solutions for the global ITS industry. The ITS industry is focused on improving the mobility, enhancing the safety, increasing the efficiency and reducing the environmental impact of highway and roadway transportation systems. IRD has a network of direct and independent operations and relationships in strategic geographic regions to identify and pursue ITS opportunities around the world.

Factory – The Company considers businesses focused on operations optimization, predictive maintenance, inventory optimization and health and safety in production environments as operating in a “factory” environment and classifies its related investments in the Factory segment. The Company’s first investment in this segment is VIZIYA based in Hamilton, Canada, a software company providing Enterprise Asset Management (“EAM”) software solutions to asset intensive industries worldwide through its presence in Australia, Europe, the Middle East and South Africa. VIZIYA has created software solutions that enhance each step of a customer’s work management process, to help customers measure the results of their initiatives, particularly focused on asset criticality, urgency, and compliance to ensure customers implement their asset strategies.

Segment revenues and profitability for the year ended December 31, 2017 are as follows. The eliminations include inter-segment eliminations, including management fees and other fees.

	For the year ended December 31, 2017
	Technology			Mobility			Factory			Corporate			Total
Revenues	$	100,645		$	27,023		$	7,043		$	-		$	134,711
Cost of revenues (excluding depreciation and amortization)		29,478			18,646			1,185			-			49,309
		71,167			8,377			5,858			-			85,402
Selling, general and administrative		6,490			5,870			3,310			4,300			19,970
Research and development		-			1,883			1,372			-			3,255
Depreciation of property, plant and equipment		339			627			89			2			1,057
Amortization of intangibles		20,611			2,292			2,019			-			24,922
Loss on disposal of intangibles		21,916			-			-			-			21,916
Impairment losses on intangibles		4,350			-			-			-			4,350
Special charges		-			-			-			(294	)		(294	)
Results from operations		17,461			(2,295	)		(932	)		(4,008	)		10,226
Finance income		(614	)		(3	)		-			(86	)		(703	)
Finance expense		932			113			10			(2	)		1,053
Foreign exchange loss (gain)		(475	)		829			42			(600	)		(204	)
Other expense (income)		-			(390	)		-			-			(390	)
Income (loss) before taxes		17,618			(2,844	)		(984	)		(3,320	)		10,470
Current income tax expense		6,461			276			458			-			7,195
Deferred income tax expense (recovery)		3,722			(1,761	)		(755	)		(8,157	)		(6,951	)
Income tax expense (recovery)		10,183			(1,485	)		(297	)		(8,157	)		244
Net income (loss)	$	7,435		$	(1,359	)	$	(687	)	$	4,837		$	10,226

The following table reconciles the Adjusted EBITDA measure which is used in the evaluation of the performance of each segment to Net income. The Company began using Adjusted EBITDA as its principle performance measure during the year ended December 31, 2017.

	For the year ended December 31, 2017
	Technology		Mobility		Factory		Total
Adjusted EBITDA	$	64,733	$	1,868	$	1,884	$	68,485
Fair value purchase price adjustments								1,601
Dividend received from joint venture								176
Unallocated corporate expenses								3,868
Stock-based compensation expense								663
Depreciation of property, plan and equipment								1,057
Amortization of intangibles								24,922
Loss on disposal of intangibles								21,916
Impairment loss on intangibles								4,350
Special charges								(294	)
Results from operations								10,226
Finance income								(703	)
Finance expense								1,053
Foreign exchange								(204	)
Other income								(390	)
Income before taxes								10,470
Current income tax expense								7,195
Deferred income tax recovery								(6,951	)
Income tax expense								244
Net income							$	10,226

Segment revenues and profitability for the year ended December 31, 2016 are as follows. The Company was previously a single operating segment.


	For the year ended December 31, 2016
Revenues	$	92,876
Cost of revenues (excluding depreciation and amortization)		29,868
		63,008
Selling, general and administrative		9,386
Depreciation of property, plant and equipment		409
Amortization of intangibles		34,242
Results from operations		18,971
Finance income		(548	)
Foreign exchange gain		(103	)
Income before taxes		19,622
Current income tax expense		5,539
Deferred income tax expense		3,031
Income tax expense		8,570
Net income	$	11,052

Segment assets as at December 31, 2017 and December 31, 2016 are as follows:

As at	December 31, 2017		December 31, 2016
Technology	$	170,631	$	268,337
Mobility		69,832		-
Factory		33,163		-
Total segment assets		273,626		268,337
Total corporate assets		29,550		14,646
Total assets	$	303,176	$	282,983

Revenue by category for the years ending December 31, 2017 and December 31, 2016 are as follows:

	Year ended, December 31, 2017		Year ended, December 31, 2016
License	$	101,553	$	87,765
Systems		17,641		-
Services		2,086		-
Recurring		13,431		5,111
Total revenue	$	134,711	$	92,876

Revenue by geography for the years ending December 31, 2017 and December 31, 2016 are as follows:

	Year ended, December 31, 2017		Year ended, December 31, 2016
Revenues
United States	$	35,701	$	43,548
Korea		74,759		13,260
Taiwan		8,349		18,045
Canada		4,981		13
Chile		2,095		-
United Kingdom		2,002		3,105
Thailand		1,301		-
China		1,018		4,311
Cayman Islands		-		5,000
Japan		200		4,601
Rest of the world		4,305		993
Total revenue	$	134,711	$	92,876

As at	December 31, 2017		December 31, 2016
Non-current assets
United States	$	26,849	$	41,146
Canada		156,991		110,714
Belgium		759		-
Chile		310		-
Mexico		1		-
Total non-current assets	$	184,910	$	151,860

Major Customers

A major customer is defined as an external customer whose transactions with the Company amount to 10% or more of the Company’s annual revenues. During the year ended December 31, 2017, there was one major customer identified (2016: three).